THEUNIVERSITYOFDODOMA

COLLEGE OF BUSINESS STUDIES AND ECONOMICS

DEPARTMENT OF ACCOUNT AND FINANCE

COURSE NAME: PUBLIC FINANCE AND TAXATION II

COURSE CODE: AF332
COURSE INSTRUCTOR: MR. DAVID MWAKAPALA
NATURE OF ASSIGNMENT: INDIVIDUAL ASSIGNMENT
DATE OF SUBMISSION: 23rdJUNE,2023

NO NAME REG.NUMBER COURSE GENDER

1 SALMA A. DUGE T/UDOM/2020/02253 BCOM-FN F
 ASSIGNMENT ONE:

Taxation reform and amendment

These is the process of assessing the taxation act and system of colleting tax revenue in mining
sectors and making changes for any loopholes of the system in order to increase revenue
collection together with the expansion of mining sector in the country.

Since 2001 however the regulatory environment for mining has seen consistent change with
ongoing tightening of the fiscal regime, with some of the most significant changes being made in
the past 3 years, where by different straight were made to increase revenue collection in mining
sectors such as;

Value Added Tax

Tanzania’s value added tax (VAT) is charged on domestic and imported goods and services (The
United Republic of Tanzania, 2006c). The Value Added Tax Law exempts mineral sector
companies from paying VAT on some imported inputs and capital goods such as technology and
machines for mining sector so that they can collect the tax on processing and marketing the
minerals everyone will pay the tax.

But these lead to high tax rate problem because the extraction company pay 18%of the amount of
the minerals to the government as VAT but also the costume (wholesale) also will pay 18% as
VAT to the government as tax so the price of the minerals become very high to the costume as
results of tax avoidance.

Required:

1. What are the macroeconomic issues impacts of minerals in Tanzania?

2. Describe different effort and reform to improve tax revenue collection from mining sector in
Tanzania.

3. Explain the challenges faces tax policies and related issues in regard to mining sector in
Tanzania
 ASSIGNMENT TWO:
Question 11
Nickson Zablon, a public servant, imported a used Prado from Dubai. The car, manufactured in
1993, had cost her USD 8,000.00. Mrs. Peace paid, in addition to cost, Insurance and Freight
charges of USD 200.00 and 1,200.00 respectively.
On arrival to Dar port on March 30, 2007, the customs officers contended that the vehicle is
subject to uplifting, as its transaction value is not acceptable by Customs Department. After
discussion and submission of the treasury voucher in respect of import duty, Mrs. Peace was
still required to pay shillings 10,512,000.00 based on exchange rate of shillings 1,250.00 per
dollar. The applicable tax rates are Import Duty 20%, Excise Duty 10% and VAT 20%. The
assessed taxes as noted by Mrs. Peace include the Excise Duty as (Management and Tariff) Cap
147.
a) What is transactional value of imported goods;
b) List and briefly the Agreed Customs Valuation (ACV) in their hierarchical order;
c) Advise Nickson Zablon, on whether the procedures and computations by Customs
department are in line with the EACCMA, 2004.

Question 12
Mr. Mwampulo imported goods worth Sterling Pounds 340,000.00 from England and paid
expenses in respect of insurance and freight of STG 17,000.00 and 45,000.00 respectively. On
arrival, the Customs Department assessed total taxes payable as shillings. At the time of
assessment, the prevailing exchange rate was shillings 2,150.00 to Sterling Pound.
The Custom Officer in charge informed Mwampulo that the value of his cargo was uplifted as
per the requirements of the east African Community Customs Management Act, 2004. The
officer further informed the importer that the applicable tax rates are Import Duty 10%, Excise
Duty 7% and VAT 18%.
After prolonged and heated discussions, disagreed with the Proper Officer and even
condemned the officer of not being conversant with law and even trying to deploy unlawful
jargons for personal gains.
Mwampulo approached you for consultancy, as he believes that you have been attending a
taxation course organized by the Millennium Professional Accountants Trainers and Consultants
at Mtendeni Primary Scholl for over three months now. Importation docket Mr. Handles to
show, inter alia, Mr. Mwampulo is supposed to pay shillings 372,397,200.00. Required
Advice Mwampulo whether the proposals by the Customs Officer are legal and compute the
value adopted by the proper officer.
ASSINGMENT ONE ANSWERS:
1.
Tanzania is a country rich in minerals, including gold, diamonds, and tanzanite. The
mining sector has been a significant contributor to the country's economy, accounting for around
4.8% of GDP in 2019. However, the mining industry in Tanzania has faced several
macroeconomic issues that have impacted the country's economy.

Main macroeconomic issues related to minerals in Tanzania is the issue of revenue

collection. Tanzania has been criticized for not collecting enough revenue from its mining sector.
In 2017, the government introduced new mining regulations that required mining companies to
pay higher royalties and taxes. However, some companies have been accused of underreporting
their production levels to avoid paying higher taxes and royalties. This has led to a loss of
revenue for the government, which could have been used to fund social programs and
infrastructure development.

Also, macroeconomic issue related to minerals in Tanzania is environmental degradation.

Mining activities can have a significant impact on the environment, including deforestation, soil
erosion, and water pollution. These environmental impacts can have long-term effects on the
ecosystem and human health. In recent years, there have been concerns about the environmental
impact of mining activities in Tanzania, particularly in areas where artisanal and small-scale
mining takes place.

Another macroeconomic issue related to minerals in Tanzania is the issue of resource

curse. The resource curse refers to the phenomenon where countries with abundant natural
resources tend to have slower economic growth and higher levels of corruption. Tanzania has
been identified as one of the countries at risk of experiencing the resource curse due to its
reliance on natural resources such as minerals. The resource curse can lead to a lack of
diversification in the economy, which can make it vulnerable to fluctuations in commodity
prices.
 In conclusion, while minerals have contributed significantly to Tanzania's economy, there
are several macroeconomic issues related to their extraction and exportation that need to be
addressed. These include revenue collection, the resource curse, and environmental degradation.

2.

Tanzania has implemented several efforts and reforms to improve tax revenue collection
in recent years. The followings are some of them;

Modernization of the Tanzania Revenue Authority (TRA) through the use of technology,
due to some difficulties that arises and hinder tax collection, one among of the effort that
Tanzania has made is to modernize and improve the Tanzania Revenue Authority (TRA) in their
operation activities including the use of technology for tax collections. It introduced an
electronic tax system that allows taxpayers to file their tax returns online, pay taxes
electronically, and receive electronic receipts. This has made the tax payment process more
efficient and transparent, reducing opportunities for corruption and increasing compliance. Also
it is the best option than helps to collect tax easily and save time rather than to collect directly
from each tax payer.

Simplification of tax laws and procedures, also the government has revised tax laws to
make them more user-friendly and easier to understand for taxpayers. The government done
some amendments from the old Acts so that to ensure fairly treatment to tax payers and being
updated and also to enable taxpayers to understand and and use it as required. This has helped to
reduce confusion and increase compliance among taxpayers since all people can access the laws
and procedures, understand them and be aware of it.

Educate taxpayers on their tax obligations, The TRA has launched public awareness
campaigns to educate citizens on the importance of paying taxes and how to do so correctly.
They provide education in the societies, at schools and colleges, they create Tax clubs and other
ways so that to ensure tax education reach the society. This has helped to increase compliance
among taxpayers who were previously unaware of their obligations and increase tax collected
from different people.

Increase focus on combating tax evasion and fraud. The TRA has established a special
unit dedicated to investigating cases of tax evasion and fraud, and has increased penalties for
those found guilty of such offenses. It introduce some penalties in which will be charged to those
who will conduct fraud and tax evasion so that to make people to pay taxes as they are required
to pay on their own willing. It helped to deter individuals and businesses from engaging in such
activities.

Establishment of the Tanzania Mineral Audit Agency (TMAA) in 2009, the TMAA is
responsible for monitoring and auditing mining operations to ensure compliance with laws and
regulations. The agency also assesses the value of minerals produced and ensures that mining
companies pay appropriate taxes and royalties. Through the establishment of TMAA helps to
enable effectively control and increase taxes from different Mining sectors.

In 2017, Tanzania introduced a new Mining Policy that aimed to increase revenue
collection from the sector. The policy includes provisions for increasing government
participation in mining activities, promoting local content development, and improving
environmental management practices.

Overall, these efforts and reforms have led to significant improvements in tax revenue
collection in Tanzania. In 2019, Tanzania's tax revenue collection increased by 7.5% compared
to the previous year.

3.

The mining sector is a crucial industry that contributes significantly to the economic
growth of many countries. However, tax policies and related issues have posed significant
challenges to the mining sector. The followings are some of them;

Complexity of tax policies and regulations, Tax policies in the mining sector are often
complex and difficult to understand, making it challenging for companies to comply with them.
Despite of the simplicity and amendments which are conducted to make them simpler and easy
understandable, tax needs a lot of knowledge to access and understand them. This complexity
can lead to non-compliance, which can result in penalties and fines.
 Lack of transparency in tax policies. Many countries do not have transparent tax policies,
which can lead to corruption and tax evasion. This lack of transparency can also make it difficult
for companies to plan their investments and operations effectively.

Frequent changes of tax policies and regulations, these changes can be sudden and
unpredictable, making it challenging for companies to plan their investments and operations
effectively. Frequent changes in tax policies can also create uncertainty and discourage
investment in the sector.

Lack of coordination between different government agencies responsible for tax policies
in the mining sector. This lack of coordination can lead to conflicting policies and regulations,
which can create confusion and increase compliance costs for companies.

In conclusion, tax policies and related issues pose significant challenges to the mining
sector. The complexity of tax policies, lack of transparency, frequent changes, and lack of
coordination between government agencies are some of the major challenges that need to be
addressed.

ASSIGNMENT TWO ANSWERS:

1.

A) Data given

Goods cost: USD 8000

Insurance: USD 200

Freight: USD 1200

Import duty: 20%

Excise duty: 10%

VAT 20%

Exchange rate: 1$ = Tsh.1250/=

Required to be pay: Tsh.10,512,000

Solutions

Computation Amount

CIF (8000 + 200 + 1200) $ 9400/=

Add: Import duty (20% of CIF) $ 1880/=

Total $ 11,280/=

Add: Excise duty (10% of 11,280) $ 1,128/=

Custom value $ 12,408/=

Add: vat (20% of custom value) $ 2,481/=

Transaction value $ 14,889.6/=

Ex rate given - 1$ = Tsh.1250/=

14,889.6 $ = x

X = Tsh. 18,612,000/=

b) Customs valuation is the process of determining the value of goods for the purpose of
calculating customs duties and taxes. The World Trade Organization (WTO) Agreement on
Customs Valuation (ACV) provides a framework for customs valuation that is followed by most
countries. The ACV sets out six methods for determining the customs value of imported goods,
which are listed below in hierarchical order:

(i) Transaction value method: This is the primary method for determining customs value and
is based on the price actually paid or payable for the goods when sold for export to the
country of importation. The transaction value must be adjusted to account for certain
costs and expenses incurred by the buyer that are not included in the price.
(ii) Transaction value of identical goods method: If the transaction value cannot be used, this
method may be used if identical goods have been sold for export to the country of
importation at or about the same time as the goods being valued.
 (iii) Transaction value of similar goods method: If neither of the above methods can be used,
this method may be used if similar goods have been sold for export to the country of
importation at or about the same time as the goods being valued.
(iv) Deductive value method: This method involves deducting certain costs from the sale
price of the goods in order to arrive at a customs value. The costs that may be deducted
include selling commissions, packing costs, and any other costs incurred after shipment
but before arrival in the country of importation.
(v) Computed value method: This method involves calculating a customs value based on
production costs, selling expenses, and a reasonable profit margin.
(vi) Residual method: This method may be used if none of the above methods can be applied.
It involves using any reasonable means to determine a customs value, including using
values from similar or identical goods or using a previous customs value.

In summary, customs valuation follows a hierarchical order with the transaction value method
being the primary method, followed by the transaction value of identical goods method, and then
the transaction value of similar goods method. The other methods are used only if the primary
methods cannot be applied.

c) To assess the compliance is through review of the customs procedures, regulations and
calculations carried out by the department would be necessary .It is advisable for Nickson
Zablon to consult with the relevant authorities or to seek professional advice to evaluate
the procedures and computations in details ,in order to ensure that the follow the correct
procedures and pay the appropriate taxes and duties.

2. Data given:

Goods value: £ 340,000

Insurance: £ 17,000

Freight: £ 45,000

Exchange rate: 1£ = Tsh. 2150/=

Import duty: 10%

Excise duty; 7%

VAT (18%)

Tax supposed: Tsh. 372,397,200/=

Solution

Computation Amount

CIF ( 340,000 + 17,000 + 45,000 ) £ 402,000

Add: import duty ( 10% of CIF) £ 40,200

Total £ 442,200

Add: Excise duty ( 7% of 442,200) £ 30,945

Custom value £ 473,154

Add: VAT (18% of cv) £ 85,167.72

Transaction value £ 558,321.72

Ex rate: 1£ = Tsh.2150/=

£ 558, 321.72 = x

X = Tsh.1,200,391,698/=

Therefore, from the above results proposals, it has been revealed that there is a mismatch
between the amount that is required to be paid by Mr. Mwampulo which is 1,200,391,698 TZS
and the amount asked by the officer which is 372,397,200 TZS. This means the value from the
custom officer is undervalued from the normal calculations.
REFERENCES

1. “The impact of Macro economic Factors on Minerals Prices in Tanzania ”by Moses E.

Lyimo.

2. “Economic and Social Impact of the Mining Sector on Tanzania’s Development : A

Review ” by George M Kinyashi and Canislus R. Kayambo (2006).